Whether you have created a business, operated a business or invested in a business.
At some point, you may consider selling. Maybe you are interested in buying into a
business or an interest in a business. What does this look like? What does this mean?
Does this mean buying/selling the entire company or just the ownership interest. These
transactions can look simple on the surface but often carry legal consequences that
aren’t obvious until after the deal closes. Taking time to understand the legal framework
can help avoid costly surprises later.
The first thing to ask is what exactly is being sold. There’s a legal difference between
buying/selling the assets of a business and buying/selling ownership in the business. In
an asset sale, the buyer purchases specific assets such as equipment, inventory,
customer lists, contracts, and goodwill. However, the business entity itself does not
change hands. In an ownership sale, the buyer purchases stock in a corporation or
membership interests in an LLC, effectively stepping into the seller’s position as owner.
This distinction matters because liability often follows ownership. Yet, even in an asset
sale, Florida law allows creditors to challenge a transfer that appears designed to avoid
debts. Florida’s Uniform Fraudulent Transfer Act addresses this issue. See Fla. Stat. § 726.105.
Next, we need to look at what type of business structure is being bought/sold. Florida
law treats corporations, LLCs, and partnerships differently when it comes to ownership
transfers. For corporations, the Florida Business Corporation Act (Fla. Stat. § 607)
governs share transfers and certain shareholder rights, including potential appraisal
rights for minority shareholders in major transactions. The corporation’s bylaws will likely
also speak to this. For LLCs, the Florida Revised Limited Liability Company Act applies
(Fla. Stat. § 605). Most importantly, LLC operating agreements often limit or condition
the transfer of membership interests. If those rules are ignored, the transfer may be
ineffective. Partnership interests are governed by Florida’s Revised Uniform Partnership
Act, Fla. Stat. § 620, which includes rules on dissociation and buyouts. Regardless of
the structure of the business, before agreeing to sell, the governing documents should
be reviewed closely as many disputes arise simply because internal rules were
Overlooked.
Additionally, selling a business almost always involves third-party contracts that are
already in place at the time you are looking to buy or sell. Things to consider include
commercial leases, bank loans, franchise agreements, and vendor contracts that often
require consent before a sale or assignment. Failing to address these requirements can
lead to defaults or termination of these third-party contracts after closing.
Buyers should also conduct due diligence. Sellers are typically asked to make written
representations about finances, taxes, litigation, employees, and regulatory compliance.
Under Florida law, inaccurate or incomplete disclosures can lead to post-closing
indemnity claims.
Lastly, Florida is generally favorable toward enforcing non-compete agreements tied to
the sale of a business. Florida Statute § 542.335 governs such restrictions. Of note,
protecting goodwill is considered a legitimate business interest, and courts will enforce
reasonable restrictions. While it is not necessary to be overly concerned about such
agreements to the sale, reasonableness and necessity of these restrictive covenants
must be considered to make sure they will be upheld if they are ever challenged.
Whether you are selling or looking to purchase a business or ownership interest, the
structure of the deal, compliance with Florida statutes, and careful contract drafting all
play a role in protecting the parties long after the closing date.
Buying or Selling a Business
We are often brought into transactions after issues have already surfaced—usually in the form
of unclear terms or incomplete documentation. In most cases, those problems could have been
addressed at the outset.
A business transfer involves more than the exchange of assets. The underlying agreements,
corporate records, and allocation of risk all require careful review before anything is finalized.
Our role is to help identify those issues early and ensure the transaction is properly
documented.
Additional information on related matters can be found in our corporate law and business
transactions sections.
If you are considering a purchase or sale, we are available to discuss your situation and provide
guidance as needed. You may contact James Gonzalez or any of the attorneys at Cobb &
Gonzalez directly to speak with our office.